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NBN's 121 ways to ruin real competition

Date posted: 22/03/2011

The new national broadband network is effectively built upon the principle of swapping copper for glass and providing consumers with a fiber last mile access tail. However, that access tail needs to connect to the rest of the world, and the way that occurs is with points of interconnect where lots of access tails for a particular area are all bundled up and delivered to the service provider.

In the current ADSL network Telstra Wholesale operate, they aggregate all the customer access tails from each state and deliver it to 7 points of interconnect - ACT, NSW, QLD, VIC, SA/NT, WA and TAS. For the other DSL carriers like Optus, you can get anywhere between 1 to 7 points of interconnect depending on your size or network design.

Initially, the design back in November 2010 called for 14 points of interconnect- just like the current ADSL network but with extra redundancy. However, after significant lobbying from telecommunications companies with significant fiber assets (Telstra, Optus, TPG, NextGen), a complete about face occurred. These companies did not want their fiber assets to be stranded or sold to NBNCo as a result of the highly aggregated interconnection points and of course, why would they?

The ACCC has announced earlier this month that they have settled on 121 points of interconnect (POI) where retail telecommunications providers will be required to connect their networks with NBNCo.

Why is this of any concern or importance to consumers? Well, one of the key selling points of the NBN was that it was a uniform wholesale access paradigm that would usher in a new realm of competition.

The 121 points of interconnect in essence means that the only telecommunications providers capable of connecting into the NBN will be all of the current incumbents - Telstra, Optus and TPG.

Therefore, instead of dismantling the vertically integrated monopoly that is Telstra, the government have created a horizontal layer between the vertically integrated monopolies that will still continue to operate. Telstra Wholesale will be breathing a great sigh of relief because they still have a viable business model, and all the current and new retailers that will emerge on the NBN will still be their customers, except now, there will be another layer of bureaucracy to content with to get a fault fixed or a service provisioned.

Bad for competition, bad for any Telecommunications with less than a few hundred million dollars capitalization and bad for the consumer overall.

 
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